EP8: Shamir Karkal, founder Bank Simple (first neobank) and Sila, on how fintech has evolved over the last decade, what he's most excited about, and predictions for the next decade

Paradigm Shift

Summary:

Conversation with Shamir Karkal, co-founder of Sila. Prior to Sila, he was co-founder of Bank Simple, which was the first US neobank and early fintech pioneer. For many it was one of the most exciting and groundbreaking products of the last decade. We talk about the Bank Simple story, banking and fintech landscape, and his new company Sila. Sila makes it easy for any business to program money through APIs for digital wallets, linked accounts, ACH, money storing, transferring and payouts.
Episode Highlights:

1. Career path from software engineer to consultant at McKinsey with financial services clients
2. Founding story and vision for Bank Simple — first US neobank, founded in a Brooklyn basement
3. Why starting a bank in 2009 was crazy, and how the landscape evolved after the 2008 financial crisis
4. Inventing the modern fintech bank partnership model and path to market with a simpler bank that replaced retail branches with software and no-fees
5. Story behind selling to BBVA for $117m after raising only $20m
6. Getting excited about building fintech platforms to make access to banking infra easier, and founding Sila
7. How Sila makes it easy for any business to program money through APIs for digital wallets, linked accounts, ACH, money storing, transferring and payouts
8. History of regulatory landscape around getting a full banking charter — 100s a year before 2008 to just a handful in the following decade, and how its becoming more feasible again
9. Pros and cons to having a banking charter— ability to lend FDIC insured deposits and fully leverage the "3, 6, 3" business model
10. How cyclical nature of credit industry and credit crunches makes stable FDIC deposits high-value for the lending business model of banks
11. Bank Simple's business model, unit economics and strong early growth
12. Activation and direct deposit as a key product lever for newer neobanks
13. Looking forward, why global financial services industry is exciting— $17T annual revenue industry, 30x larger than $600b global advertising industry (out of ~$100T global GDP)
14. Opportunity for fintech to go from 1% market share to 10% this decade
15. Prediction: fintech and crypto in 2030 could be as big as all of tech in 2020, with few $1T+, few dozen $100B+, and 100s of $1B+ companies
16. Crypto doesn’t change underlying trends but might accelerate through faster/easier permissionless innovation on a global scale
17. Regulators can’t control on chain work but can regulate on/off ramps and how Sila enables on/off ramps and connectivity between crypto and traditional banking through flexible APIs

Links:

• Read more about Sila: https://silamoney.com/
• Follow Shamir on Twitter: https://twitter.com/shamir_k

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